SEC releases new guidelines for Shariah advisory services

The Securities and Exchange Commission has released new rules on Shariah Advisory Services for non-interest capital market products and services.

A statement by the Commission in Abuja on Thursday, said Shariah governance was crucial, the rules and principles were also important in non-interest capital market operations and transactions.

According to SEC, the provision of the rules is in line with local and international best practices.

The Commission said the guideline was essential for the development of the sector, saying that it would promote transparency and confidence.
It said the guideline would also create level-playing field for all participants in the market.

“Making Shariah advisory service a registerable function in the market will assist in effective implementation of the proposed consolidation of the governance rules.

“It will also be an additional source of revenue to the commission,” SEC said.

The Commission said that non-interest capital market activities were increasing as the market witnessed more asset managers, listing of sovereign Sukuk on Exchanges and issuance of corporate Sukuk.

SEC said only issuer or fund manager, with the consent of the trustee, would appoint a Shariah Adviser to provide advisory services for Shariah products, issuances and schemes.

It said that a capital market operator who sought to provide Shariah compliant products and services would appoint a registered Shariah Adviser for the firm and notify the Commission.

“The rule stipulates that the SEC may register a Shariah Adviser or renew the registration of a registered Shariah Adviser subject to the applicant satisfying some criteria.

“These developments, coupled with the necessity of shariah services for the market affirms, are the critical needs for guideline.

“This is to set minimum standard for persons seeking to provide advisory services for non-interest capital market activities.

‘An individual eligible to provide Shariah Advisory services under these rules shall possess minimum of a Bachelor’s degree in Shariah, which includes study in Usul Fiqh (principles of Islamic jurisprudence),” it said.

The Commission said that the roles and responsibilities of a Shariah adviser shall include issuing Shariah certification, outlining the basis and rationale of the structure, among others.